Vice Premier Jiang Yi-huah said yesterday that he was “shocked” at the Democratic Progressive Party’s (DPP) pension reform proposal.

Photo: Taipei Times

Following criticism over its proposed changes to the Labor Pension Fund, which would see higher premium payments and lower payouts for private-sector workers, the Cabinet yesterday countered that the opposition’s proposal would place workers at a greater disadvantage.

In an interview with Hit FM radio early yesterday, Vice Premier Jiang Yi-huah (江宜樺), the architect behind the Cabinet’s reform proposal, said that he was “shocked” at the Democratic Progressive Party’s (DPP) proposal, which he said would “double the premium burden on workers compared with the Cabinet’s proposal.”

“Is that the DPP’s way of taking care of the working class?” Jiang asked.

“I’ve read criticism in newspapers saying that our proposal would drive employees to death, but I was shocked when I saw the DPP’s proposal. Isn’t the DPP the one that’s trying to drive employees to death?” he asked.

Later, at a press conference at the Executive Yuan, Council of Labor Affairs Minister Pan Shih-wei (潘世偉) said the DPP’s proposal would put “the working class at a disadvantage, while giving capitalists a greater advantage.”

The Cabinet and the DPP on Wednesday unveiled their respective plans to reform the nation’s pension systems, which cover more than 10 million private-sector employees, military personnel, civil servants and public school teachers.

On labor pension reform, the Cabinet presented two proposals on the methods for calculating pension payments. However, premium payment would remain the same, with employers contributing 70 percent, the government 10 percent and employees 20 percent.

Under the DPP’s proposal, employers would be responsible for 60 percent of the insurance premiums and employees 40 percent, which the party said was “in line with international trends.”

Jiang cast doubt on the DPP’s formula, saying that exempting the government from the premium- sharing burden was “against the spirit of the pension scheme.”

The Labor Pension Fund is a social insurance, and therefore the government should be held to a certain level of responsibility to contribute to the premium; otherwise it would be commercial insurance, Jiang said.

Taking as an example an employee with an insured salary of NT$43,900, Jiang said that under the Cabinet’s proposal, the worker will have to contribute NT$1,712 per month to the fund when the premium rate rises to its highest level, at 19.5 percent, in 2036.

However, under the DPP’s proposal, the worker will have to pay NT$2,854 per month when the premium rate rises to its highest at 16.5 percent 30 years after the policy change. That is an additional NT$1,142 a month, or NT$13,704 a year, compared with the Cabinet’s proposal, he said.

“The DPP said our proposal would cut employees’ pension claims to a significant extent, but the DPP’s would impose a much heavier burden on employees,” he said.

Meanwhile, Pan said that the DPP’s proposal was designed “in favor of capitalists rather than employees.”

When the premium rate rises to 16.5 percent under the DPP’s proposal, companies will have to pay an extra NT$74.7 billion for their workers’ premiums, much lower than the NT$124.5 billion they would incur under the Cabinet’s proposed premium rate of 19.5 percent, Pan said.